However they satisfy their nicotine cravings, tobacco users are facing a big hit as the single largest federal tobacco tax increase ever takes effect Wednesday. Tobacco companies and public health advocates, longtime foes in the nicotine battles, are trying to turn the situation to their advantage. The major cigarette makers raised prices a couple of weeks ago, partly to offset any drop in profits once the per-pack tax climbs from 39 cents to $1.01. Medical groups see a tax increase right in the middle of a recession as a great incentive to help persuade smokers to quit. Tobacco taxes are soaring to finance a major expansion of health insurance for children. President Barack Obama signed that health initiative soon after taking office. Other tobacco products, from cigars to pipes and smokeless, will see similarly large tax increases, too. For example, the tax on chewing tobacco will go up from 19.5 cents per pound to 50 cents. The total expected to be raised over the 4 1/2 year-long health insurance expansion is nearly $33 billion. The tax increase is only the first move in a recharged anti-smoking campaign. Congress also is considering legislation to empower the Food and Drug Administration to regulate tobacco. That could lead to reformulated cigarettes. Obama, who has agonized over his own cigarette habit, said he would sign such a bill. Some policy analysts have questioned the wisdom of boosting tobacco taxes to finance health care for children. The tobacco industry is also warning that the steep increase will lead to tax evasion through old-fashioned smuggling or by Internet purchase from abroad.
